Section 7 (Part 4): Correct Information Returns
Section 7 (Part 4): Correct Information Returns....................................................................... 1 Correct & Reissue 1095-C Forms (IRS) ................................................................................................................2 Correct 1095-C Forms (IRS Copies) .............................................................................................................2 Print 1095-C Forms (IRS Copies)..................................................................................................................4 Correct a 1094-C Form ..................................................................................................................................5 Dealing with Penalty Assessment Letters ..............................................................................................................8 What is a Letter 226J? ...................................................................................................................................8 Answers to Common 226J Questions ............................................................................................................9 General Information.......................................................................................................................................9 What are Letters 227? .................................................................................................................................. 10 Answers to Common 227 Questions............................................................................................................ 11
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Correct & Reissue 1095-C Forms (IRS) If you send your ACA Information Returns on paper to the IRS, you may receive a penalty assessment letter. These letters are usually sent anywhere from nine months to two years after you file the return. The following information will help you correct 1095-C forms and print correction forms for the IRS.
Correct 1095-C Forms (IRS Copies) 1.
Go to ACA > Annual Reports > Edit 1095-C Information.
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Select the Transaction # you would like to edit. Ensure you have selected the transaction for the correct employee and tax year.
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Click Employee. The HR Employee View window will appear with the employee’s file open, as shown in the following image.
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Enter the corrected information in the employee’s file. Click Save.
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Return to the Enter/Edit Form 1095-C window. The transaction for the employee’s file you just edited should still be open. Select the Corrected (IRS) checkbox and click Save.
Each corrected transaction being mailed to the IRS must have the Corrected (IRS) checkbox selected and saved. When this checkbox is selected, an “X” will be printed in the ‘CORRECTED’ checkbox at the top of the form. See the following image:
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Continue to open transactions and edit employee files until all corrections have been made. Once you have made your final correction, leave the Enter/Edit Form 1095-C window open and continue to Step 7.
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Print 1095-C Forms (IRS Copies) 7.
Click the Print 1095-C’s shortcut on the Enter/Edit Form 1095-C window. The Print 1095-C Forms window will open.
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Ensure the correct tax year is entered.
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Select either of the landscape options in the Select Form section.
10. Select Multiple in the Employees to Print section and click Select. Continue to select all employee accounts you have edited and saved as Corrected (IRS). Click Ok.
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11. Click Preview on the Print 1095-C Form window. Ensure all corrected forms have been selected and the information being corrected is accurate. Click Print to print IRS copies of the corrected forms. 12. Create a new 1094-C to accompany your corrected 1095-C forms. Go to ACA > Annual Reports > Enter/Edit 1094-C Form. 13. Enter the Tax Year being corrected, your contact information, and the total number of Forms 1095-C being submitted with this transmittal. Click Print. Caution: Do not select the Corrected checkbox or the Check this box if this is the authoritative transmittal for this ALE Member checkbox when creating a new 1094-C to accompany corrected 1095-C forms. 14. Ensure your printed 1094-C and all your 1095-C correction forms are reviewed for accuracy before being mailed to the IRS.
Correct a 1094-C Form The following steps are general instructions for creating a Corrected Form 1094-C for the IRS. You will need to file a standalone, fully completed Corrected Form 1094-C. If you have any additional questions, please refer to the current IRS Instructions for Forms 1094-C and 1095-C. Depending on what information is being corrected on your 1094-C, it may be necessary to first make corrections to HRM settings or employee files and reissue corrected 1095-C’s to employees. See Section 7, Part 2. You may determine on your own that your original Authoritative Transmittal 1094-C contained errors. Or you may receive a penalty assessment letter 226J informing you of the errors, (please follow all instructions in the letter and provide any and all supporting documentation needed to substantiate your response.) Caution: Do not file a return correcting information on a Form 1094-C that is not the Authoritative Transmittal. If you do not need to correct and reissue 1095-C’s or you have already done so, follow these instructions: 1.
Go to ACA > Annual Reports > Enter/Print 1094-C Form.
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Enter the Tax Year of the original Authoritative Transmittal you are correcting.
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Select the Corrected checkbox.
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Select the Check this box if this is the authoritative transmittal for this ALE Member checkbox.
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Complete the Parts I & II tab, filling in all applicable entries. Do not manually enter the number of forms you are submitting. The compile will automatically fill in these entries.
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Click the Part III tab and then click Compile.
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The MEC Offer Report will appear, review this report for accuracy. Then examine each line of the original 1094-C form and compare it 6
with your corrected 1094-C information. Ensure all fields in Parts I & II, Part III, and Part IV (as applicable) are now filled out correctly. 8.
Click Print. The Print 1094-C window will appear as shown in the following image. When you click Preview or Print in this window, your corrected transaction will be saved automatically.
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Mail your Corrected 1094-C to the IRS. Include any supporting documentation requested in your assessment Letter 226J, if applicable.
For more information: See Section 7, Part 4, Dealing with Penalty Assessment Letters.
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Dealing with Penalty Assessment Letters What is a Letter 226J? The IRS examines each Information Return, and when they find that any aspect of the ACA law was not followed, they issue a Letter 226J. This informs you of any possible liability for an Employer Shared Responsibility Payment (ESRP). The determination of whether an ALE may be liable for an ESRP, and the amount of the proposed ESRP in Letter 226-J, are based on information from Forms 1094-C and 1095-C filed by the ALE and the individual income tax returns filed by the ALE’s employees. The IRS has provided a Sample Letter 226J that you can DOWNLOAD. The letter provides instructions on how to respond to the proposed penalties and provide supporting documentation for any disputed penalty assessment. If the IRS requests a corrected 1094-C Form, follow the instructions above to create and print a Corrected 1094-C. Then print, sign and mail the corrected form along with your documentation and written response to Letter 226-J. The following is found on the IRS website and is subject to change: What you need to do •
Read your letter and attachments carefully. These documents explain the ESRP process and how the information received affects the computation.
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The letter fully explains the steps to take if you agree or disagree with the proposed ESRP computation.
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Complete the response form (Form 14764) indicating your agreement or disagreement with the letter.
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If you disagree with the proposed ESRP liability, you must provide a full explanation of your disagreement and/or indicate changes needed on Form 14765 (PTC Listing). Return all documents as instructed in the letter by the response date.
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If you agree with the proposed ESRP liability, follow the instructions to sign the response form and return it along with full payment in the envelope provided.
You may want to •
Review the information reported on Forms 1094-C and 1095-C for the applicable year to confirm that the information filed with the IRS was accurate, because the IRS uses that information to compute the ESRP.
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Keep a copy of the letter and any documents you submit.
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Contact the IRS using the information provided in the letter if you have any questions or need additional time to respond.
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Send the IRS a Form 2848 (Power of Attorney and Declaration of Representative) to allow someone to contact them on your behalf. Note that the Form 2848 must state specifically the year and that it is for the Section 4980H Shared Responsibility Payment. 8
Answers to Common 226J Questions Why did I receive this letter? The IRS used the information you provided on Forms 1094/5-C and determined that you are potentially liable for an ESRP. Where did the IRS get the information used to compute the ESRP? The IRS used form 1094/5-C filed by the ALE and the individual income tax returns of your full-time employees to identify if they were allowed a premium tax credit. Is this letter a bill? No, the letter is the initial proposal of the ESRP. What do I need to do? Review the letter and attachments carefully and complete the response form by the date provided. What do I do if the information is wrong or I disagree? Follow the instructions in the letter to provide corrected information for consideration by the IRS. The IRS will reply with a letter informing you of their final determination. Do I have appeal rights? Yes, the acknowledgement letter that you receive will spell out all your rights, including your right to appeal.
General Information
For more info visit ACA information center for Applicable Large Employers How to get help Call the number of the IRS employee listed on the top right corner of your letter. About the Office of Appeals The Office of Appeals is an independent organization within the IRS that helps taxpayers resolve their tax disputes through an informal, administrative process. Their mission is to resolve tax controversies fairly and impartially, without litigation. Appeals reviews cases after the IRS has made its decision, offering an objective point of view on each appealed case. Appeals also offers mediation services through Fast Track Settlement and other programs. These mediation programs are designed to help you resolve your dispute at the earliest possible stage in the audit or collection process. Getting Started with Appeals If you’ve received an IRS letter stating that your case qualifies to be reviewed by Appeals, then the following topics will help you get started. 9
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Appeals – An Independent Organization
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Is Appeals the place for you?
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Requesting an Appeal
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What can you expect from Appeals?
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How Appeals is organized
What are Letters 227? The various Letters 227 are acknowledgement letters sent to close an ESRP inquiry or provide the next steps to the Applicable Large Employer (ALE) regarding the proposed Employer Shared Responsibility Payment (ESRP). There are five different 227 letters: •
Letter 227-J acknowledges receipt of the signed agreement Form 14764, ESRP Response, and that the ESRP will be assessed. After issuance of this letter, the case will be closed. No response is required.
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Letter 227-K acknowledges receipt of the information provided and shows the ESRP has been reduced to zero. After issuance of this letter, the case will be closed. No response is required.
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Letter 227-L acknowledges receipt of the information provided and shows the ESRP has been revised. The letter includes an updated Form 14765 (PTC Listing) and revised calculation table. The ALE can agree or request a meeting with the manager and/or appeals.
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Letter 227-M acknowledges receipt of information provided and shows that the ESRP did not change. The letter provides an updated Form 14765 (PTC Listing) and revised calculation table. The ALE can agree or request a meeting with the manager and/or appeals.
Letter 227-N acknowledges the decision reached in Appeals and shows the ESRP based on the Appeals review. After issuance of this letter, the case will be closed. No response is required. What you need to do •
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Read your letter and attachments carefully. These documents explain the next steps available and provide information on how the case will be resolved.
If appropriate, complete the response Form 14764 indicating your agreement or disagreement. If you disagree with the proposed ESRP, you must provide an explanation of why you disagree and/or indicate changes needed on Form 14765. Return all documents as instructed in the letter by the response date. If you agree with the proposed ESRP, follow the instructions to sign the response form and return it with full payment in the envelope provided. You may want to •
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Review the information reported on Forms 1094-C and 1095-C for the appropriate year to make sure that the information provided
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was accurate because the IRS used that information to compute the ESRP. •
Review the information provided in response to the Letter 226-J to make sure it was used to compute the ESRP by the IRS.
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Keep a copy of the letter and any documents you submit.
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Contact the IRS using the information provided in the letter if you have any questions or need additional time to respond.
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Send the IRS Form 2848 (Power of Attorney and Declaration of Representative) to allow someone to contact us on your behalf. The Form 2848 must state the year and that it is for the Section 4980H Shared Responsibility Payment.
Answers to Common 227 Questions Why did I receive this letter? The IRS used the information you provided in response to the initial Letter 226-J to review your ESRP. The Letter 227 version that you received explains the outcome of that review and the next steps to take to fully resolve the ESRP. Where did the IRS get the information used to compute the ESRP? The IRS used Forms 1094/5-C filed and the income tax returns of your fulltime employees to identify if they were allowed a premium tax credit. If changes to that information were submitted in response to a Letter 226-J, the IRS considered that information and, if needed, updated the proposed ESRP. Is this letter a bill? No, the Letter 227 is not a bill. A CP220J, a bill, will be received after the ESRP has been assessed. What do I need to do? Review the letter and attachments carefully and complete and return the Letter 227-L or 227-M by the date provided. What do I do if the information is wrong or I disagree? Discuss your issues or concerns with the person working your case. Use the information provided on the letter to contact the IRS or send them your questions in writing to the address shown on the letter. Do I have appeal rights? Yes, the letter you receive will explain all of your rights, including your right to appeal. General Information For more info visit ACA information center for Applicable Large Employers.
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